Cecilia Malmstrom, EU home affairs commissioner, said in a statement: “Crime is finding new ways. With the help of malicious software, it is possible to take control over a large number of computers and steal credit card numbers, find sensitive information or launch large-scale attacks.

“It is time for us to step up our efforts against cyber crime, also often used by organised crime. The proposals we are putting forward today are one important step, as we criminalise the creation and selling of malicious software and improve European police co-operation”.

AFP reported that the Commission’s proposals included giving anyone proven to have used malicious programs or stolen passwords to commit crimes a minimum two year jail sentence.

Meanwhile, a longer sentence of at least five years would be applicable for crimes causing significant damage or committed for a criminal organisation.

Neelie Kroes, Commission VP for the digital agenda, added: “Making every European digital will only happen if citizens feel confident and safe online.

“Cyber threats know no borders. A modernised European Network and Information Security Agency will bring new expertise and foster exchanges of best practice in Europe. Our EU institutions and governments must work ever closely together, to help us understand the nature and scale of the new cyber-threats.”

The Commission also proposed strengthening and modernising the European Network and Information Security Agency (ENISA), established in 2004, to reinforce co-operation across member states, law enforcement authorities and the industrial sector.

It said the proposals would be forwarded to the European Parliament and the EU’s Council of Ministers for adoption.

Meanwhile, the EU has announced it is taking the UK government to court for breaching European Union laws on web privacy.

It follows complaints made by internet users to the Information Commissioner relating to the secret use of Phorm by ISPs such as BT.

EU Telecoms Commissioner Viviane Reding said in a statement: “Technologies like internet behavioural advertising can be useful for businesses and consumers but they must be used in a way that complies with EU rules.

“These rules are there to protect the privacy of citizens and must be rigorously enforced by all Member States.

“We have been following the Phorm case for some time and have concluded that there are problems in the way the UK has implemented parts of EU rules on the confidentiality of communications.

“I call on the UK authorities to change their national laws and ensure that national authorities are duly empowered and have proper sanctions at their disposal to enforce EU legislation on the confidentiality of communications.

“This should allow the UK to respond more vigorously to new challenges to ePrivacy and personal data protection such as those that have arisen in the Phorm case. It should also help reassure UK consumers about their privacy and data protection while surfing the internet.”